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Wednesday, January 9, 2008

TOKYO (Thomson Financial) - Japan's index of leading economic indicators fell to 10.0 in in November from 18.2 in October because of inventory increases and weak consumer confidence, preliminary data released by the Cabinet Office on Thursday showed.

The drop in the index was in line with economist forecasts.

The leading index, which is used as an early indicator of how the economy will fare over the next three months, hit zero in September, the first time it touched this level since December 1997.

The index has now stayed below the boom-and-bust line of 50 for the fourth straight month.

A reading above 50 points indicates economic expansion over the next six months, while that below 50 suggests contraction.

The leading economic indicator was above 50 points for two consecutive months in June and July last year, the first time it has stayed above the boom-and-bust line for more than a single month since June 2006.

The leading index is based on 12 indicators, of which data for 10 were available for the preliminary reading, with one pointing to an expansion and nine indicating a contraction.

The coincident index, which measures the state of the economy at the time the readings are taken, fell to 33.3 from a revised 70 in October, matching the market's consensus forecast.

The coincident index is based on 11 indicators, of which data for nine were available for the initial reading, with three pointing to expansion and six suggesting a contraction.

The lagging index, which reflects economic conditions three months before, jumped to 75.0 from a revised 60. The figure was based on four of six indicators used to compute the index, with three pointing to expansion and one suggesting contraction.